Netherlands Business Forecast Report Q3 2012

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Elections To Lead To Another Coalition Government
The outcome of Dutch parliamentary elections scheduled for September is too close to predict We expect the formation of a coalition
government which will look to cut the country's budget deficit below the EU-mandated 3 0% of GDP by 2013 However, this will be hard
to achieve, and we instead forecast the budget deficit at a modestly wider 3 2% of GDP Nevertheless, we believe steady progress
along a path of fiscal consolidation will reassure investors of the Netherlands' sovereign credentials, although we note that the stability
of a new coalition is set to be tested
TABLE: POLITICAL OVERVIEW
TABLE: MAIN AUSTERITY BUDGET MEASURES
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Deeper Into Recession And Weak Recovery Ahead
With the Netherlands expected to head deeper into recession, we have revised our 2012 real GDP growth forecast to -0 6%, from a
previous forecast of -0 3% The eurozone sovereign debt crisis is set to weigh on external demand, and the government's commitment
to fiscal austerity will hurt weak domestic demand We forecast very tepid growth of 0 6% in 2013, and expect the Netherlands to remain
in a low longer-term growth trajectory
TABLE: ECONOMIC ACTIVITY
Regional Exchange Rate Forecast
Euro Speculation Reaching Fever Pitch
Turmoil in the eurozone is fuelling speculation over the future of the currency union, with the sharp increase in short positions driving
the euro lower The volume of net short contracts has reached the highest level since the introduction of the euro, with the unit sliding
down to US$1 2463/EUR on June 8 and nearing major support around the US$1 2000/EUR level Although a push through this level
would set up another leg down towards dollar parity, we caution that negative sentiment could be overdone in the short term A relatively
favourable outcome in the upcoming Greek parliamentary election or the announcement of a bold policy initiative from Europe's
politicians could arrest the euro's decline and prevent a collapse through US$1 2000/EUR
Regional Monetary Policy
A Perfect Storm Brewing
Although the European Central Bank (ECB) did not adjust monetary policy at its June meeting, pressure is rising on the central bank
to intervene and counter the lack of progress on economic reform from Europe's politicians Ultimately, we expect a further expansion
of the ECB's long-term refinancing operations and the Securities Market Programme, although both are time-saving measures that are
becoming increasingly toothless in light of the plunging confidence in the ability of policymakers to save the eurozone
Regional Banking Sector
Hitting Turbulence
The eurozone banking system is facing tremendous stress at the disaggregated level, despite appearing more robust from a top-down
perspective The growing disparity between core and periphery banking sectors will force the European Central Bank to expand its
balance sheet further and continue to intervene heavily in order to stabilise the financial system Assuming the eurozone is stabilised,
banks will see slower growth, tighter regulation and a full-blown banking union over the longer term
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Business Environment
SWOT Analysis
BMI Business Environment Risk Ratings
Chapter 4: Key Sectors
Freight Transport
TABLE: AIR FREIGHT
TABLE: MARITIME FREIGHT – THROUGHPUT
TABLE: RAIL FREIGHT
TABLE: ROAD FREIGHT
TABLE: INLAND WATERWAY FREIGHT
Other Key Sectors
TABLE: FOOD & DRINK SECTOR KEY INDICATORS
TABLE: PHARMA SECTOR KEY INDICATORS
TABLE: TELECOMS SECTOR KEY INDICATORS
Chapter 5: BMI Global Assumptions
Global Outlook
World Slows As Euro Crisis Simmers
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES REAL GDP GROWTH FORECAST
TABLE: REAL GDP GROWTH CONSENSUS FORECASTS
TABLE: EMERGING MARKETS REAL GDP GROWTH FORECAST 29